Oil Prices Rise on Dollar Softness and Yemen Shipping Attack
Oil prices climbed for the second consecutive day on Thursday, driven by a weaker dollar and another assault on shipping vessels near Yemen.
Brent crude futures increased by 35 cents, or 0.4%, reaching $83.38 a barrel at 1036 GMT. Meanwhile, U.S. West Texas Intermediate crude futures surged by 37 cents, or 0.5%, to $78.28 a barrel.
The dollar index declined by 0.3% to 103.66, providing support to oil prices. A weaker dollar typically enhances oil prices by making it more affordable for buyers holding other currencies.
Two missiles targeted a vessel off the southeast coast of Yemen on Thursday, resulting in a fire onboard, according to British maritime agencies. These attacks by the Houthis are part of their continued assaults on shipping to demonstrate solidarity with the Palestinians amid the Gaza conflict.
“…. [Hostilities] in and around the Red Sea by Iran-backed Houthi rebels on commercial ships are guaranteed to continue keeping the geopolitical risk premium at an elevated level,” said PVM Oil’s Tamas Varga.
Despite the upward momentum, further price increases were tempered by a rise in U.S. crude inventories.
Market sources, referring to American Petroleum Institute data, reported on Wednesday that U.S. crude stocks surged by 7.17 million barrels in the week ending Feb. 16. Gasoline reserves increased, while distillate fuel inventories dropped.
U.S. crude inventories have risen amidst outages at major refineries, resulting in utilization rates at their lowest in two years, though these plants are gradually resuming output.
Individuals familiar with plant operations stated that BP’s 435,000 barrel-per-day (bpd) refinery in Indiana, the largest in the U.S. Midwest, is anticipated to resume full production in March after experiencing a power outage since Feb. 1.
TotalEnergies‘ 238,000-bpd refinery in Port Arthur, Texas, is currently in the process of restarting operations after a weather-related power outage. However, it is still operating at minimal capacity.
Based on a Reuters poll, analysts expect U.S. refinery run rates to have risen to 81.5% last week from 80.6% of total capacity in the previous week.
Investors are awaiting official inventory data from the U.S. Energy Information Administration (EIA) scheduled for release at 1600 GMT on Thursday, delayed by one day due to a U.S. holiday.
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